Warren shows what kind of senator she will be

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Senator Elizabeth Warren conferred with Senator Joe Manchin, a West Virginia Democrat, at a Senate Banking Committee hearing on Feb. 14 in which she pressed financial regulators on their effectiveness.

EVER SINCE Elizabeth Warren defeated Scott Brown last November, Washington insiders (especially Democrats) have been intensely curious about what kind of a senator she would turn out to be. Warren’s political views aren’t the source of curiosity: She’s a liberal.

Rather, the mystery revolved around when and how she would use her considerable celebrity to advance those views, and whether or not she could succeed in the hidebound, stiflingly hierarchical culture of the Senate.

Hillary Clinton established a model for how celebrity senators are expected to comport themselves after she was elected from New York in 2000. When she first arrived on Capitol Hill, Clinton was mobbed by camera crews, which for weeks trailed her TMZ-style through the bowels of the Senate frantically trying to elicit comment. Clinton ignored all but the local reporters and took pains to avoid saying anything controversial. “I’m a workhorse, not a showhorse,” was her constant refrain.

In a bastion of ego like the Senate, Clinton’s subordination of her own celebrity was shrewd politics, as was the elaborate deference she showed to her senior colleagues. Clinton stayed quiet for years. In meetings, she poured coffee for male senators. When Clinton was first elected, Republican Senator Trent Lott of Mississippi suggested that it wouldn’t be a terrible thing if she were struck by lightning. But by the end of her term, Clinton had co-sponsored legislation not only with Lott but with 48 other Republicans as well. She was a surprisingly effective senator.

Warren arrived in the Senate more of a crusader than Clinton, which only heightens the challenge a celebrity senator confronts: balancing one’s unique platform and the potential good it can yield against the resentment that outspokenness can arouse among self-important colleagues. As Clinton understood, this can undermine any senator’s effectiveness.

Initially, Warren appeared to follow the Clinton script. Though her media horde is comparatively smaller, she soon gained a reputation for giving national reporters the cold shoulder. But all that changed a week ago Thursday at a Banking Committee hearing on Wall Street oversight, Warren’s first as a senator. The hearing was a typically somnolent affair until her turn came to question the regulators testifying before the committee. Warren devoted the five minutes allotted her to the seemingly abstruse topic of banking settlements, like the $1.9 billion fine the British megabank HSBC agreed to pay the Justice Department last December after it was caught laundering money for drug dealers (among other things).

In a short preamble, Warren admonished the regulators for not being more aggressive in taking big banks to trial, explaining how this harms the public interest. “If a party is unwilling to go to trial, either because they’re too timid or because they lack resources,” she said, “the consequence is they have a lot less leverage in all the settlements that occur.”

She continued: “We face some very special issues with big financial institutions. If they can break the law and drag in billions in profits, and then turn around and settle, paying out of those profits — they don’t have much incentive to follow the law. It’s also the case that every time there’s a settlement and not a trial, it means that we didn’t have those days and days and days of testimony about what those financial institutions have been up to.”

Warren was interrupted by applause from the gallery — something seldom heard at Banking Committee hearings. But her most effective line came afterward, in the question she posed to the regulators: “Can you identify when you last took [one of] the Wall Street banks to trial?”

Amazingly, none could. And the excuses proffered as to why they couldn’t reinforced Warren’s claim that banks “too big to fail” have also become “too big for trial.” “We have not had to do it as a practical matter to achieve our supervisory goals,” stammered Thomas J. Curry, the comptroller of the currency.

Warren’s exchange became a YouTube sensation and quickly spread across political and news websites. Many people in and out of Washington are newly alert to the issue of bank settlements.

But her performance plainly violated the Clinton doctrine of maintaining a low profile. Will she pay a price?

Probably not. The Senate has undergone a radical and depressing transformation in the decade since Clinton’s first term. Partisanship and obstruction have ground proceedings to a crawl. Today, Clinton’s charm offensive would be less likely to win Republican co-sponsors and far less likely to yield new laws — Congress barely passes any significant ones nowadays.

But new laws aren’t the only way to attack a problem, especially in the realm of financial regulation. One way is, as Warren suggested, to enforce existing laws more aggressively. Another is to stave off banks’ attempts to weaken them. The big fight this session will be over how regulators should apply the Dodd-Frank banking reforms of 2010.

Eventually, though, the Senate will have to legislate. And the next big fight may well be over whether to break up the big banks. An unlikely coalition of politicians and regulators on the left and right who favor this option has lately begun to take shape.

This group so far lacks the critical mass necessary to get a bill through Congress. In the days of yore, a newcomer like Warren could bide her time, gradually win the respect of her colleagues, and then, maybe, after years of diligent effort, put together a coalition large enough to succeed. Today’s Senate doesn’t operate that way. Public pressure, often driven by outrage and anger, is the only force that reliably brings results.

Warren may never achieve Clinton’s popularity among Senate Republicans. But despite the Banking Committee drama — or, actually, because of it — her first hearing gave no reason to think she’ll be any less effective.

Joshua Green is national correspondent for Bloomberg Businessweek. Follow him on Twitter @JoshuaGreen.